How to Avoid Fake Insurance Companies in Nigeria

What Is Fake Insurance / Unlicensed Insurance in Nigeria

Fake insurance or unlicensed insurance refers to schemes or operations where:

• A company, agent, or cooperative claims to sell insurance but is not licensed by the appropriate regulator.

• The policy or certificate they sell is invalid, meaning the policyholder has no protection if something goes wrong.

• Sometimes the documents are forged, or the insurance “product” doesn’t exist in law.

So, even though you believe you have insurance, the company is not legal, so they cannot pay out claims legally.

How Unlicensed vs Licensed Insurance Differ

Why Fake Insurance Companies Are a Big Problem

Understanding the dangers helps you take the risk seriously.

Financial Loss

• You pay premium but at the time of claim, you get nothing.

• Sometimes people pay for policies that do not exist or belong to fake companies, losing money entirely.

Legal and Official Risks

• For example, motor third‑party insurance is compulsory for vehicles. If you have fake cover, in accident or police stop, you may be in trouble.

• Law enforcement or courts may ask for proof; fake cover will not satisfy requirements.

Lack of Claim Support

• Real insurers have adjusters, customer service, legal obligations. Fake ones avoid paying, delay, or refuse to answer.

Damage to Trust / Reputation

• When people are defrauded, many lose trust in the insurance industry. This makes genuine insurers suffer, and people are reluctant to buy real policies.

Effect on Vulnerable Communities

• Working class or students may be more targeted with cheap offers they don’t verify. Because they may not have full knowledge, they suffer more.

Legal Framework: What Laws Regulate Insurance in Nigeria

To know what makes an insurance company legal vs fake, it’s important to know the laws and agencies.

NAICOM – The National Insurance Commission

• NAICOM is the regulatory body in Nigeria that licenses insurance companies, brokers, agents, and ensures compliance with insurance laws.

• Any company offering insurance must be registered and licensed with NAICOM. If not, their policies are not valid.

Key Laws: NAICOM Act, Insurance Act

• NAICOM Act 1997: Establishes NAICOM and gives it power to regulate.

• Insurance Act 2003: Sets rules for underwriting, licensing, obligations of insurers and policyholders. Fake insurers break this act.

Enforcement and Fines

• NAICOM has warned that operating without license is illegal and subject to prosecution.

• For example, policies sold by NCIS (National Cooperative Insurance Society) for third‑party motor insurance were declared illegal by NAICOM.

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Key Red Flags: How to Spot a Fake Insurance Company

Here are signs that an insurer might be fake or policy might not be real. Always check these before buying.

Red Flag 1: Not on NAICOM Licensed Companies List

• If you search NAICOM’s website, there is a list of all registered and licensed insurance companies. If the purported insurer is not on that list → big red flag.

Red Flag 2: Claims Made That Only Licensed Insurers Can Do

• Sometimes fake insurers say they can sell third‑party motor insurance or compulsory policies but are not licensed. NAICOM has warned that only licensed insurers can underwrite compulsory third‑party motor insurance.

Red Flag 3: Too‑Good‑To‑Be‑True Premiums or Deals

• Offers that are much cheaper than typical market rate often mean they are fake or hiding something. They may cut corners (no actual cover, no legal backing).

Red Flag 4: No Physical Office or Invalid Contact Information

• If the company has no official address, has fake or broken phone numbers, no licensed agent or broker association, this is suspicious.

Red Flag 5: Fake Certificates or Poor Documentation

• Certificates with weird fonts, no license numbers from NAICOM, inconsistent or generic terms.

• Agents giving you policies without formal stamped documents or copy of licence, or producing policy documents that don’t match what they promised.

Red Flag 6: Insisting You Pay in Unsafe Ways

• Demanding cash to personal accounts or insisting on payment outside official banking channels.

• No receipts or “tickets” etc.

Red Flag 7: Pressure / Urgency / Fear Tactics

• Agents telling you you have to buy now or law enforcement will fine you if no policy immediately, with no time to verify.

• High‑pressure sales often used by scammers.

Red Flag 8: Verifying Tools / Database Discrepancies

• If policy can’t be verified via NAICOM database or NIID (Nigerian Insurance Industry Database).

• If agent says policy is valid but NAICOM site doesn’t show you as a policyholder or company is not listed.

How to Verify an Insurance Company Is Licensed with NAICOM

These are practical steps Nigerians can follow to check legitimacy.

Step 1: Check NAICOM Website for Licensed Company List

• Go to NAICOM’s official website. Find the list of licensed insurance companies, agents, and brokers.

• Confirm the insurer’s name exactly matches (same name, spelling).

Step 2: Check Product Type Is Licensed

• Insurance companies have licenses for certain classes of insurance (motor, health, life, property etc.).

• Even if company is licensed, they must have license for that specific class. For example, not all insurers may underwrite motor insurance.

Step 3: Use NIID or Other Official Databases

• The Nigerian Insurance Industry Database (NIID) allows verification of motor third‑party insurance certificates.

• Use the verification tools (online or USSD *7292# etc.) to see if certificate is real. (As per recent enforcement actions by NAICOM.)

Step 4: Ask for License Number and Proof

• Request the insurer’s license number, the name of the CEO, company registration (Corporate Affairs Commission), proof of address.

• If agent, ask for agent’s license or registration number.

Step 5: Contact NAICOM Directly If Unsure

• Use NAICOM’s contact info to ask if that company is real. Take screenshot, write email.

• NAICOM often makes public warnings about fake insurers. Check recent news.

Safe Steps to Buying Insurance from a Real Insurer

These are steps you can take to buy insurance safely, reduce risk of being scammed.

Step 1: Define What Type of Insurance You Need

• Motor (third party, comprehensive), health, property, life, travel etc.

• Know what perils or risks you want coverage for.

Step 2: Get Multiple Quotes from Licensed Insurers

• Compare 2‑3 or more companies you verify are licensed.

• Ask for full policy documents, premium details, coverage, deductibles.

Step 3: Ask for Full Documentation Before Paying

• Request the policy document, contract, certificate, terms & conditions, official receipt.

• Check if documentation has license number, NAICOM stamp, insurer’s name and address.

Step 4: Pay via Official Channels

• Use bank transfers to official insurer’s account, or official POSs at insurer’s office.

• Get receipts. Keep evidence of payment.

Step 5: Read Policy Terms & Conditions Carefully

• Look at exclusions, waiting periods, duration, renewal terms.

• Make sure you understand what claims process is, how you will be supported.

Step 6: Maintain Records, Communications

• Keep copies of all documents, receipts, phone numbers, names of agents.

• If you receive text messages or emails, save them.

Step 7: Examine Your Insurance Certificate or Vehicle Third‑Party Certificate

• In motor insurance, the Third Party Motor Insurance certificate is mandatory. Make sure it is valid, has correct vehicle info, valid until date, print quality good etc.

Step 8: Follow Up and Verify Once Policy is Issued

• After purchase, check on NAICOM/NIID to see if your policy/certificate is listed.

• If there is online code on the certificate, verify it with insurer and NAICOM.

Common Types of Fake Insurance Scams and How They Work

Here are types of scams people fall for and how scammers try to trick people.

Scam Type 1: Fake Third‑Party Motor Insurance Certificates

• Scammers sell motor third‑party insurance certificates pretending to be legal. Sometimes cooperative societies claim they have the right to issue them. NAICOM issued warnings about NCIS doing so illegally.

• These fake certificates may look real, but are invalid. If you are in an accident, you won’t be covered.

Scam Type 2: Unlicensed Agents or Brokers

• People claiming to be agents for well-known insurers, selling policies but are not registered. May use names that sound similar to real companies.

• They collect premium, maybe give unrealistic promises, then cannot deliver when claims come.

Scam Type 3: Copycat Companies or Cooperatives Claiming Insurance Powers

• Cooperatives like “NCIS—National Cooperative Insurance Society” sometimes claim they can underwrite third‑party motor insurance, though they are not licensed. NAICOM has publicly disowned them.

Scam Type 4: Fake Travel Insurance / Health Plans

• Promises of health cover or travel policy that never existed or docs never sent.

• Some may ask for premium, then disappear or send worthless documents.

Scam Type 5: Premium Forwarding Scams

• Scammer persuades you to pay premium via unconventional channels: mobile money, personal accounts, etc.

• After payment, they disappear, and you have no valid policy.

Scam Type 6: Fake Renewal or “Expired Policy Revival”

• Calls or messages saying your policy expired, “renew now to avoid huge fine” or “reactivate old policy” but they are fake.

• They ask you pay, then fade away.

Comparisons: Licensed vs Unlicensed / Fake Insurers

Understanding how things differ helps you see clearly what real insurance gives vs fakes.

Real‑Life Examples: Cases of Fake Insurance in Nigeria

To make things clear, here are some examples from recent news, showing how fake insurance appears and is uncovered.

Example 1: NCIS Selling Third‑Party Motor Insurance Illegally

• NCIS (National Cooperative Insurance Society) claimed to provide valid third‑party motor insurance policies via its portal. NAICOM has warned this is illegal. NCIS is NOT licensed to underwrite third party motor insurance.

• Public warning from NAICOM: Nigerians are urged not to patronise or buy policies from NCIS for compulsory third‑party motor insurance.

Example 2: Fake Certificates in Licensing Offices

• NAICOM has reported that many fake third party insurance certificates are being sold at licensing offices.

• Some licensing officers were implicated in facilitating or enabling such sales.

Example 3: Public Warnings by NAICOM

• In February 2025, NAICOM repeatedly warned Nigerians through media about illegal operators, false certificates, cooperative societies claiming insurance powers.

• They stated only licensed companies may underwrite third‑party motor insurance.

Summary Table Before Conclusion

Conclusion

Fake insurance companies are a real danger in Nigeria. Many people lose money, suffer legally, or are left without protection because they bought fake or unlicensed insurance. But you can protect yourself by being careful, doing your homework, and following verification steps.

Always check if insurer is licensed by NAICOM, verify product, use official tools to check certificates, get proper documents and receipts, compare premiums, be wary of too good offers, and check public warnings.

When you buy from real, licensed companies, legitimate agents, and follow safe steps, you are more likely to get genuine coverage. Your premium payments will then be useful, and claims will be paid when needed.

Stay safe, trust verified insurance, and resist the temptation to rush into cheap offers without checking.